By Anna Hirtenstein
U.S. stock futures wavered Tuesday ahead of the start of earnings season with several large U.S. banks giving updates.
Futures tied to the S&P 500 edged down 0.2%, suggesting stocks could come under pressure after the opening bell. A rally in megacap tech stocks led the broad market index on Monday to its second-highest close in history. Futures linked to the Nasdaq-100 ticked up 0.9%
Uncertainty about a second wave of coronavirus infections and the extent to which governments may have to renew restrictions to control the spread are weighing on investors' minds as the third-quarter earnings season kicks off on Tuesday.
"Earnings season will create a lot of volatility, especially ahead of the election," said Ludovic Subran, chief economist at Allianz. "The market focus will remain on financial and tech earnings: this will be a main driver."
BlackRock shares added 2.8% premarket after it reported third-quarter profit that was above expectations and revenue that rose above forecasts. JPMorgan Chase shares gained 1.3% after it posted earnings per share above expectations, but also said it would extend the suspension on stock repurchases at least through the end of the fourth quarter. Shares of Citigroup rose 1.1% after the bank reported earnings per share well above estimates, although profit still declined 34% from the same period last year.
Johnson & Johnson shares slid 1.3% ahead of the New York opening bell after it halted its coronavirus vaccine trials due to a participant becoming unexpectedly sick, prompting fresh speculation about when immunization shots may become widely available. The company also raised its full-year expectations for adjusted operational sales in its earnings report.
J&J's vaccine is one of the most advanced Covid-19 shots in development, and is among just a handful that had entered the last stage of testing in the U.S. This is the second time such a trial has been put on hold over a safety concern: AstraZeneca has since resumed its testing efforts in the U.K., but its clinical trials in the U.S. remain suspended.
"It's a reminder that while we have this race to get a vaccine, it could actually take longer," said Paul Jackson, global head of asset-allocation research at Invesco. People are also being too optimistic over how quickly a vaccine can halt the pandemic, he cautioned. "If we get one through the trials and authorized, that would be a great step, but then it will still take quite some time to get it widely distributed."
In bond markets, the yield on benchmark 10-year Treasury notes edged down to 0.741%, from 0.775% on Friday.
Inflation in the U.S. rose in September at 1.4% year over year, compared with 1.3% the previous month, according to the U.S. Bureau of Labor Statistics, in line with economists' expectations. The Federal Reserve recently said that it is planning to continue its easy-money policy even if inflation ramps up.
In trading ahead of the opening bell, Walt Disney rose 4.2% after it announced a major reorganization of its business to focus more on streaming. Apple's shares added 1.4% ahead of a company presentation scheduled for Tuesday where it is expected to unveil the next iPhone.
Overseas, the pan-continental Stoxx Europe 600 fell 0.3%.
In Asia, most major benchmarks were mixed by the close of trading. The Shanghai Composite Index was flat after trade data showed that Chinese exports rose nearly 10% in September, reflecting a continuing recovery. Markets in Hong Kong were closed due to Tropical Storm Nangka being slated to hit the city.
The International Monetary Fund also put out an updated outlook for global economic growth, as finance ministers and central bankers gather virtually for the IMF and World Bank's annual meetings. It raised its forecasts for 2020, saying that it now expects the downturn to be less severe than it thought in June.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
10-13-20 0854ET
